In the Matter of The Leora L. Buerkle Irrevocable Insurance Trust dated September 17, 1993.

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A20-0908

In the Matter of The Leora L. Buerkle Irrevocable Insurance Trust
dated September 17, 1993.

Filed May 3, 2021
Reversed and remanded
Johnson, Judge

Hennepin County District Court
File No. 27-TR-CV-19-77

John D. Reddall, James J. Kretsch, Jr., Kretsch Law Office, P.L.L.C., Lakeville, Minnesota
(for appellant/cross-respondent Paul Gray)

John G. Westrick, Savage Westrick, P.L.L.P., Bloomington, Minnesota (for
respondents/cross-appellants)

Jesse C. Beier, Joseph J. Cassioppi, Fredriks on & Byron, P.A., Minneapolis, Minnesota
(for respondent Union Bank and Trust Company)

Considered and decided by Hooten, Pres iding Judge; Johnson, Judge; and Slieter,
Judge.
NONPRECEDENTIAL OPINION
JOHNSON, Judge
The trustee of a trust distributed trust inco me to the sole heir of a beneficiary who
had died. Other interested pe rsons objected. The district court determined that the
deceased beneficiary’s heir is not entitled to the deceased beneficiary’s share of trust
income on the ground that the deceased beneficiary had only a life interest in trust income,
not a fee interest that could be devised by will. We conclude that th e district court erred

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by determining that the trust agreement granted the deceased beneficiary only a life interest
in trust income rather than a fee interest. We further conclude that the heir of the deceased
beneficiary is entitled to trust income if he can prove on remand that the deceased
beneficiary inherited her mother’s share of trus t income. We further conclude that, if the
district court were to conclude that the heir was not entitled to the trust income that the
trustee paid to him, the district court should reconsider the trustee’s request for approval of
its accounting. Therefore, we reverse and remand for further proceedings.
FACTS
Leora L. Buerkle died in 1998. Approx imately five years before her death, she
established the Leora L. Buerkle Irrevocable Insurance Trust. She named the Union Bank
& Trust Company of Minneapolis as trustee.
The trust agreement provid es that, after Leora’s deat h, trust income shall be
distributed, in specified shares, to ten identified donees, all of whom are or were Leora’s
siblings or siblings-in-law. The trust agreement provides that, after the deaths of the ninth
and tenth donees (who died in 2008 and 2017, respectivel y), their shares shall be
redistributed to the other eight donees. Fo r each of the first eight donees, the trust
agreement provides for distribution of trust income with uniform language but in different
percentages. For the second beneficiary, the trust agreement provides for distributions of
trust income to “Lorna Drill, Leora L. Buerkl e’s sister, a 5% share thereof with right of
representation.” For the third beneficiary, the trust agreement provides for distributions of
trust income to “Carl Drill, Leora L. Buerkl e’s brother-in-law, a 5% share thereof with
right of representation.” The trust agreement fu rther provides that, upon the deaths of all

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original donees, “all remaining trust assets sha ll be distributed to the then current income
recipients pro rata.” At the time of the district court proceedings, three of the ten original
donees were still living.1
Carl Drill and Lorna Drill died in 1996 and 2003, respectivel y. During their
lifetimes, they had two children: a son, Lynn, and a daughter, Brenda. Lynn Drill died in
1970. Lynn Drill was the biological father of Paul Gray, who wa s adopted at birth by
unrelated persons. After Leora Buerkle (Bre nda Drill’s grandmother) died in 1998, the
trustee began distributing Carl Drill’s 10-percent share of trus t income to Brenda Drill.
After Lorna Drill (Brenda Drill’s mother) died in 2003, the trustee began distributing Lorna
Drill’s 10-percent share of trust income to Brenda Drill.
Brenda Drill died in 2007 with no survivi ng spouse, children, siblings, or parents.
Shortly thereafter, Gray petitione d the Sibley County District Court for the probate of
Brenda Drill’s will, which named him as her so le heir. At approximately the same time,
Gray wrote to the trustee of Leora Buerkle’s trust to request distributions of Carl Drill’s
and Lorna Drill’s shares of trust income. Gray’s letter stated that he survived Lynn Drill
and that Brenda Drill had no ch ildren. The trustee then be gan distributing 20 percent of
trust income to Gray.

1Attached to this opinion is a chart resembling a family tree, which was prepared by
the trustee and filed in the district court. The chart depicts the ten original donees of the
trust and, with respect to those among the first eight donees who have died, their children
or heirs. Consequently, th e chart identifies all benefi ciaries who were receiving
distributions of trust income at the time of district court proceedings.

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In December 2018, the trustee was informed that Gray had been adopted at birth by
persons not in the Buerkle or Drill families. In April 2019, the trustee petitioned the district
court for a determination “as to whether Paul Gray has an interest in the income or principal
of the Trust and the nature and extent of his interest by right of representation as to the
original beneficial interest of Lorna Drill and Carl Drill, or whether that interest should be
reallocated to the remaining beneficiaries in accordance with the terms of the Trust.” The
trustee stated that, between 2007 and April 1, 2019, Gray had received $28,047 in
distributions of trust income. The trustee also submitted an accounting and requested that
the district court approve it and approve all of the trustee’s actions during the accounting
period. In addition, the trustee requested an order approving the payment of its costs and
attorney fees from trust assets.
The district court scheduled a hearing on the trustee’s petition for mid-July 2019.
Shortly before the hearing, an objection was filed by various interested persons, including
one original donee and othe r persons who presently are income beneficiaries or
descendants of original donees . The objectors alleged that Gr ay has no interest in trust
income, that the trustee should be charged for distributions of trust income to Gray, that
the trustee’s request for costs and attorney fees should be denied, and that the objectors
should be reimbursed for their costs and attorney fees.
It appears from the limited re cord that the mid-July hearing did not occur. In early
January 2020, Gray served and filed a motion in which he requested that the district court
“determin[e] the vesting date of the beneficial interests of” the benefici aries of the trust.
Gray and the objectors filed memoranda of law on that issue. The district court conducted

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a hearing in late January 2020. In April 2020 , the district court filed an order in which it
concluded that Gray is not entitled to trust income but is not required to return the money
previously distributed to him. The district court also approved the trustee’s accounting and
ruled that the trustee could use trust assets to pay its costs a nd attorney fees related to the
proceeding.
The objectors requested rec onsideration of the district court’s approval of the
trustee’s accounting and the trustee’s request fo r costs and attorney fe es. Gray joined in
the objectors’ request and also requested rec onsideration of the dist rict court’s ruling on
his interest in trust income, arguing that the district court went beyond the scope of his
motion for a determination of a vesting date. The district court denied both requests for
reconsideration.
Gray filed a notice of appeal, and the obj ectors filed a notice of related appeal.
DECISION
I. Gray’s Appeal
Gray makes two arguments in his principal brief. First, he argues that the district
court erred by ruling on the entirety of the trustee’s petition rather than only his motion for
a determination of a vesting date, which is the specific issue that he identified in his notice
of motion and motion. Second, he argues that the district court erred by determining that
he does not have an interest in trust income. We begin by considering his second argument.
In interpreting a trust agreement, a court should seek “to ascertain and give effect to
the grantor’s intent.” In re Stisser Grantor Trust, 818 N.W.2d 495, 502 (Minn. 2012). “A
court should seek out the grantor’s dominant intention by construing the trust agreement in

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its entirety.” In re Van Dusen Marital Trust , 834 N.W.2d 514, 520 (Minn. App. 2013),
review denied (Minn. June 26, 2013). A trust instrument is to be construed “to give effect
to the [grantor’s] intent as expr essed in [its] plain language.” In re Kischel, 299 N.W.2d
920, 923 (Minn. 1980). Accordingly, “[i]f the trust agreement is unambiguous, a court
should look to the language of the agreement to discern the grantor’s intent and not consider
extrinsic evidence.” Van Dusen, 834 N.W.2d at 520; see also In re Trust Created Under
Agreement with McLaughlin , 361 N.W.2d 43, 44-45 (Mi nn. 1985). “Under all
circumstances [the trust] must be construed to carry out the main object of the settlor as
disclosed by its terms notwithstanding inaccuracies of expression, ineffectiveness of terms,
or the presence of provisions therein which on their face appe ar inconsistent therewith.”
In re Fiske’s Trust , 65 N.W.2d 906, 910 (Minn. 1954). “This court applies a de novo
standard of review to a district court’ s interpretation of a trust agreement.” Van Dusen,
834 N.W.2d at 520.
In this case, the parties’ dispute is focused on the trust agreement’s use of the phrase
“with right of representation” in the two pa ragraphs concerning Lorna Drill’s and Carl
Drill’s interests in trust income . The question is whether, in light of that language, Gray
presently has a right to Lorna Drill’s and Carl Drill’s interests in distributions of trust
income. The district court answered that qu estion in the negative, reasoning that “Leora
Buerkle’s intent was to give th e original income beneficiarie s a vested life interest, with
the remainder to their heirs.” The district court reasoned that such an intent was evident in
four provisions of the trust agreement:

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First, Article IV, Sections 2.1.1-2.1.8 grant each beneficiary a
specified share “thereof with right of representation.” Second,
Article IV, Section 2.2 says that “upon the death of all original
donees, all remaining trust assets shall be distributed to the then
current income recipients pro rata.” Third, Article V provides
that if, at the death of Leora Buerkle, none of the donees of
Leora Buerkle are then living, the remaining Trust principal
should be distributed to pers ons who would have been Leora
Buerkle’s intestate heirs. F ourth, Article VII, Section 1(G)
contains a spendthrift provisi on, which provides that “the
interest of each beneficiary . . . shall not be capable of
anticipation or assignment by the beneficiary.”

Gray contends that the district court e rred by reasoning that Brenda Drill received
only life interests in trust income. He notes that there is no language in the trust agreement
expressly indicating an intention to create a life interest, “such as ‘to x for life’ or ‘to x,
and then upon x’s death to y.’” He furt her contends that the words “by right of
representation” are “words of substitution” that are intended to ensure that the grantor’s
gift to an original do nee does not lapse if the original donee were to die before Leora
Buerkle’s death, which is the date on which th e rights to trust income vest. Gray asserts
that the words of substitution “ceased to have any ongoing fu nction” for original donees
who survived Leora Buerkle.
Accordingly, Gray contends that, upon Carl Drill’s death (which preceded the death
of Leora Buerkle), his interest in trust inco me passed to Brenda Drill, his representative,
because she was his issue. Cf. In re Holden’s Trust, 291 N.W. 104, 105-07 (Minn. 1940).
Gray further contends that, upon Lorna Drill’s death, her interest in trust income passed to
Brenda Drill if she was Lorna Drill’s sole hei r. Gray contends furt her that Brenda Drill
took a fee interest in her parents’ shares of trust income. In response, the objectors argue

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that both Carl Drill’s share and Lorna Drill’s share passed to Brenda Drill “by right of
representation” and that Brenda Drill has only a life interest in those shares such that the
remainder interest may pass only to the issue of Carl Drill and Lorna Drill, not to the heir
identified in Brenda Drill’s will.
In a prior case that raised the question whether an inte rest in a trust passed from a
beneficiary to the beneficiary’s child, the supreme court stated, “Minnesota favors the
vesting of estates unless the intere st is manifestly contingent.” Kischel, 299 N.W.2d at
922. In that case, the supreme court held th at the interest was contingent and that the
testator “did not intend to give his grands on any interest in the trust property unless he
survived his mother,” the primary beneficiary. Id. at 923. That was so because the
testator’s will expressly provided for it. See id. at 922.
The facts of this case, howeve r, are more similar to those of First & American
National Bank v. Higgins , 293 N.W. 585 (Minn. 1940), in which the income from two
trusts—a living trust and a testamentary tr ust—was to be distributed “to the following
named persons, described herein as beneficiaries, in the following proportions or fractional
amounts, and to their heirs at law by right of representation.” Id. at 588 (emphasis added).
A brother of the grantor and testator was entitled to one-seventh of the income of the first
trust and one-fifth of the income of the second trust. Id. After the brother died, his estate
sought to establish that the brother’s benefici al interests in the two trusts passed to the
brother’s estate. Id. at 589. The supreme court began its analysis by stating, “Words of
inheritance are not necessary to pass an absolute interest in personalty.” Id. at 590. The
supreme court continued, “Where an absolute interest passes without words of inheritance,

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a life or some lesser estate can be created only by language restraining and qualifying the
grant or gift to the interest intended.” Id. In other words, “A bequest or devise of an
absolute interest can be cut down to a lesser interest by subsequent language only when the
latter is as clear, plain and unequivocal as the language showing the passing of a fee.” Id.
The supreme court applied those principles to the facts of the case by stating, “The words
of inheritance in the instant case do not show an intention to cut down the fee to some
lesser estate” but, rather, are “expressive of an intention to pass a fee.” Id. Specifically,
the supreme court reasoned that the phrase “by right of representation ” was “not
inconsistent with the passing of a fee and [did] not indicate an intention to pass a life estate
of some kind.” Id. (emphasis added). The suprem e court further reasoned that a
beneficiary “may devise and bequeath his interest in a trust, if it does not terminate at his
death, . . . the same as any other property.” Id. at 596. Accordingly, the supreme court
concluded that the brother “took absolute and ve sted interests in the . . . trusts which he
could devise and bequeath.” Id. at 598.
In light of Higgins, Brenda Drill had a fee interest, not a mere life interest, in trust
income. The trust agreement provides that the interest of an original donee who dies before
Leora Buerkle passes by “right of representation,” which the supreme court has said is “not
inconsistent with the passing of a fee and does not indicate an intention to pass a life estate
of some kind.” See id. at 590. In that event, the interest in trust income that is received by
the representative of the original donee is limited only by the death of the last original
donee because there is no langu age in the trust agreement th at would limit it in any other
way. At Leora Buerkle’s death, all then-livin g original donees receive an interest in trust

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income. The trust agreement does not preven t an original donee who dies after Leora
Buerkle from devising the interest because there is no language in the trust agreement that
operates to “cut down to a lesser interest by subsequent la nguage” that is “as clear, plain
and unequivocal as the language showing the passing of a fee.” See id. Thus, either a
representative of an original donee, an original donee himself or herself, or an heir of an
original donee may devise his or her interest in trust income to another person by will, so
long as the interest in trust income has not lapsed due to the deaths of all original donees.
The district court’s interpretation of th e trust agreement is inconsistent with Higgins.
In addition, the district court’s four reasons for its interpretation of the trust agreement are
not persuasive. The district court’s first r eason, that the trust ag reement “grant[s] each
beneficiary a specified share ‘thereof with ri ght of representation,’” does not answer the
key question but simply begs it. The district court’s second reason, that the trust agreement
requires the distribution of all trust assets upon the death of all original donees, does place
an outer limit on the duration of an interest in trust income but does not prevent the passing
of such an interest before the death of the la st original donee. The district court’s third
reason, that the trust agreement provides for th e situation in which none of the original
donees survive Leora Buerkle, is irrelevant because that situation has not yet arisen. And
the district court’s fourth reason, that the tr ust agreement includes a spendthrift provision
that prevents attachment by creditors and assignments, has no bearing on the devisability
of a person’s interest in trust income. See Morrison v. Doyle , 582 N.W.2d 237, 240-41
(Minn. 1998); In re Moulton’s Estate, 46 N.W.2d 667, 670 (Minn. 1951).

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Consequently, Brenda Drill re ceived Carl Drill’s interest in trust income as his
representative because he died before Leora Buerkle’s deat h. Brenda Drill may have
received Lorna Drill’s interest upon her death. One might presume that Brenda Drill did
so because the trustee paid Lorna Drill’s share of trust income to Brenda Drill without any
apparent objection during Brenda Drill’s lifetime. But at oral argument, Gray’s attorney
candidly stated that there is a lack of evidence on the factual issue of whether Brenda Drill
received Lorna Drill’s share of trust income. He represented that Lorna Drill died without
a will and that Brenda Drill would have received Lorna Drill’s interest under the intestacy
statute, but he asserted that there is no eviden ce of that fact in the district court record
because the parties had not expected the district court to rule on the ultimate issue of Gray’s
interest in trust income. He further stat es that such evidence is necessary for a
determination of the question whether Brenda Drill received Lorna Drill’s 10-percent share
and, thus, necessary to a complete resolution of the question whether Gray has a right to
receive all of Brenda Drill’s 20-percent share of trust income.
Thus, the district court erred by dete rmining that Brenda Drill had only a life
interest, not a fee interest, in trust income. Brenda Drill had at least a 10-percent share of
trust income because she was Carl Drill’s representative. Thus, Gray’s right to at least 10
percent of trust income is established. Gray may establish his right to Lorna Drill’s interest
in 10 percent of trust income if he can prove that Brenda Drill inherited it. Accordingly,
we remand for further proceedings in the district court, which shall be limited to the
question whether Brenda Drill inherited Lorna Drill’s 10-percent share in trust income after
Lorna Drill’s death.

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As stated above, Gray’s first argument is that the district court erred by not limiting
its ruling to the determination of a vesting date. We note th at Gray’s motion requested a
determination of a vesting date and “any other relief the Court deems just and equitable.”
We also note that there is no dispute about the vesting date between the parties to this
appeal. In any event, because we have rule d in Gray’s favor on his second argument and
have granted him all the appellate relief he requested, it is unnecessary to resolve his first
argument.
II. Objectors’ Appeal
In their cross-appeal, the objectors argue that the district court erred by approving
the trustee’s accounting and by approving the trustee’s actions during the accounting
period. Specifically, the objectors argue that the district court resolved the trustee’s
requests without any notice, th at the district court shifte d the burden of proof from the
trustee to the objectors, that the trustee in troduced no evidence th at its accounting was
correct, and that the trustee breached its fi duciary duty by paying income to Gray. The
objectors do not challenge the district court’s grant of the trustee’s request for costs and
attorney fees.
In response, the trustee argues that it gave notice to all other parties by serving notice
of the hearing that was scheduled for July 2019; that the objectors bore the burden of
proving a breach of fiduciary du ty; that the objectors waived their right to challenge the
accounting by not asserting timely objections to the trustee’s annual reports, as required by
the trust agreement and by statute, see Minn. Stat. § 501C.1005(a) (2020); that the district
court was permitted to consider all issues ra ised by the trustee’s petition; and that the

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district court did not abuse its discretion by approving the accounting and by approving the
trustee’s actions. In reply, the objectors challenge the trustee’s argument that they waived
their right to challenge the accounting by not asserting timely objections to the trustee’s
annual reports.
All of the objectors’ challenges to the dist rict court’s ruling are based on the premise
that the trustee improperly distributed $28,047 of trust income to Gray. The objectors do
not take issue with anything else in the trus tee’s accounting. Accordingly, the objectors’
arguments that the district court committed proc edural error would be moot if Gray were
entitled to the trust income he has received. We have conc luded that Gray was and is
entitled to 20 percent of trust income if he can prove that Brenda Drill actually received
Lorna Drill’s 10-percent share of trust income after Lorna Drill’s death. See supra part I.
If Gray proves that fact on remand, there w ill be no basis for concl uding that the trustee
breached its fiduciary dut y by distributing income to Gray. In that event, the objectors
would have no basis for challe nging the district court’s appr oval of the trustee’s petition
because any procedural error by the district court would be a harmless error. See Minn. R.
Civ. P. 61.
On remand, the district court shall fi rst determine the issu e identified in our
resolution of Gray’s appeal. See supra part I. If the district court concludes that Gray was
not entitled to the trust income that has been paid to him, the district court shall reconsider
the trustee’s request for approval of its a ccounting and its actions during the accounting

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period, after giving all parties an opportu nity to present any evidence and arguments
relevant to the trustee’s requests.
Reversed and remanded.